Implications of the Coronavirus
2020 has started off on a difficult track for China. With the outbreak of the coronavirus most Chinese citizens are deeply concerned and worried about the spread of the virus, with many staying inside for the last few weeks to reduce their risk to exposure. As China begins to restart the economy, this week we are seeing signs of activity in major cities such as Beijing and Shanghai as businesses cope with the economic effects of the virus.
While China undergoes this pressure and stress, most airlines have shut off routes to and from China until March or April of this year.
The economic ramifications of the virus are still being absorbed, but it will certainly have an adverse effect across a wide range of factors for brands and destinations, including:
- Supply chains will be severely affected as factories remain closed and workers may or may not return to factories at the end of Lunar New Year. Additionally, the lack of flights coming in and out of China will impact air freight shipments to and from China.
- Chinese travelers will likely not be traveling internationally until late spring/early summer. This is typically the slow period for Chinese tourists, but this will be a super low period.
- The China retail market has been largely non-existent during the crisis and will likely continue to be very slow until the virus clears up and consumer confidence rebounds.
During this period some industries have benefited from the lockdown, including elearning, gaming and home fitness. There has also been huge demand for fresh food delivery that is being facilitated via contactless e-commerce delivery. Once China’s logistics infrastructure is fully operational again we expect to continue to see increased demand for e-commerce – both within China and cross-border.
We have the following recommendations for brands and destinations to cope with this situation in the short and mid-term:
- Take a short term pause to allow consumers to cope with the situation. Be aware that a consumers’ focus is on their health and the health of their family and friends – this is not the time for them to be focused on brand messaging and promotion. We are recommending pausing media and campaigns in Mainland China and those targeting Chinese tourists.
- Focus efforts on e-commerce – both inside of China and cross-border. Much like during the SARS crisis, the e-commerce market will take up the slack from the retail market in China, with consumers purchasing online to avoid going out to the store and to obtain products not available in China (this includes Daigou purchases) once China’s e-commerce supply chain stabilizes.
- Engage Chinese consumers living overseas: There will continue to be a large number of Chinese students and others who live abroad either part time or full time, and they will continue to act as resources for their friends and family back in China. This is an ideal time to engage this community and include them in your ongoing local activations and consumer outreach.
Above all, take a long term view of the market. After SARS cleared, China’s economy continued to boom and the number of tourists traveling overseas saw unprecedented increases. This situation is temporary, and Chinese consumers need brand and destinations support during this difficult time and their long term commitment to the market.
News
MARKETING
How are Luxury Brands Communicating with Their Chinese Consumers During the Virus Crisis?
It’s been nearly a long half-month since the outbreak of coronavirus, and Monday, February 10th, marked the first day many Chinese citizens returned to the workplace. This could initiate another wave of infections if proper precautions aren’t taken, and medical experts from the University of Hong Kong estimated that the outbreak could stubbornly hang around until around June or July.
TRAVEL
What Travelers Should Know About the Coronavirus
Head’s Up… You probably don’t need to cancel your trip!
The coronavirus that causes COVID-19 (as we’re calling it now) is still mainly circulating in China, with only about 2 percent of its cases in other countries. Still, if you’re traveling you may be nervous about the possibility of coming in contact with the virus. Here are the World Health Organization’s recommendations for travelers, which they discussed in a recent online Q&A.
You probably don’t need to cancel your trip
Your risk of catching any disease is higher in a crowded place, like an airport, than if you stay home. But the risk of catching COVID-19 is near zero for travelers almost everywhere.
WHO officials recommend checking with airlines, though, since many have suspended flights or reduced how many they are running. And some countries have imposed quarantines for returning travelers, so check the relevant policies.
Some airports are screening returning travelers for the virus, so be aware if you’re flying into one of those. There may be lines.
Don’t wear a mask unless you’re sick
Masks do very little to prevent healthy people from catching respiratory diseases, but they are good for preventing sick people from passing germs to others.
Use the same precautions you would for seasonal flu
The virus that causes COVID-19 spreads in a similar way as seasonal flu, through droplets such as the ones that are coughed or sneezed into the air. The same precautions apply:
- Wash your hands often, including before you eat.
- If your hands appear clean, you can use hand sanitizer instead of washing.
- Cough or sneeze into a tissue and throw it away, or if no tissue is available, cough into your elbow rather than spray your surroundings or your hands.
- Keep your distance from people who appear to be sick—at least three feet away.
- To protect babies, keep them close to you and away from others who may be sick.
- If you are sick, do all of the above and avoid contact with others, as much as possible. Seek medical help if you think you may have COVID-19 or if you are concerned about your health.
The good news is that the virus does not seem to be airborne, so the air circulation on planes is not likely to spread it around the cabin.
Understand that the virus is short-lived on surfaces
If droplets containing the virus get onto a surface, such as a door handle, you could potentially pick it up. That’s why hand hygiene is important. But the virus only seems to survive on surfaces for less than 30 minutes. That means packages and luggage contents aren’t considered risky.
HEALTH
China Sees Rising Recovery Rate of COVID-19 Patients
The proportion of patients who recovered from the novel coronavirus pneumonia (COVID-19) in China had increased to 10.6 percent on Tuesday from the lowest 1.3 percent on January 27, Mi Feng, an official with the National Health Commission (NHC), said Wednesday. The number of cured patients had seen relatively rapid growth, and the epidemic situation also had some positive changes in general due to the country’s reinforced measures against the virus, Mi said at a press conference in Beijing. The reported number of new cases of the disease wavered but showed a downward trend, Mi said. The number of new confirmed cases had dropped from a peak of 3,887 on February 4 to Tuesday’s 2,015, according to Mi. Outside Hubei Province, the epicenter, China’s new confirmed cases of COVID-19 has been dropping for eight consecutive days, the NHC said. The number of new suspected cases had also fallen from the highest 5,328 on February 5 to 3,342 on Tuesday, Mi said, adding that the numbers of new confirmed cases and new suspected cases had declined by 48.2 percent and 37.3 percent, respectively. According to official statistics, Tuesday saw a total of 744 people discharged from hospitals after recovery, including 417 in Hubei Province, and by the end of the day, a total of 4,740 people had been discharged from hospitals after recovery.
China Deserves Appreciation for Efforts, Sacrifices in Fighting Epidemic: WHO chief
Chinese State Councilor and Foreign Minister Wang Yi on Saturday met with the World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus here on the sidelines of the Munich Security Conference. Wang said when an epidemic occurs, rumors spread and cause panic, and there should be someone to be impartial and tell the truth. As head of WHO, Mr. Director-General has treated the novel coronavirus epidemic with professionalism and scientific attitude, affirmed the effective measures which China has taken, and called for all parties to maintain confidence, resist rumors and strengthen cooperation. “We appreciate it,” said Wang.
FASHION
Developing the Fine Art of Retail Engagement
SKP Beijing, a luxury shopping center, is embracing a mix of technology, art and fashion to take on online rivals and attract younger customers. In a digital age when many tech savvy Chinese consumers only shop online, SKP Beijing, the brick-and-mortar shopping center located outside the city’s third ring road, sold goods worth 1.01 billion yuan ($145 million) in a single day in November last year. The record-breaking revenue was generated from more than 70,000 consumers.